9999%% OOxxyyggeenn PPrroodduuccttiioonn wwiitthh ZZeeoolliitteess aanndd PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn:: DDeessiiggnnss aanndd EEccoonnoommiicc AAnnaallyyssiiss

Presentation by: Blake Ashcraft Jennifer Swenton PPrroojjeecctt GGooaallss

 DDeevveelloopp aa ppoorrttaabbllee aanndd hhoossppiittaall aaiirr sseeppaarraattiioonn pprroocceessss//ddeevviiccee wwiitthh ssiillvveerr zzeeoolliitteess ttoo pprroodduuccee aa ccoonnttiinnuuoouuss ffllooww ooff 9999%% ooxxyyggeenn  RReeccoommmmeenndd tthhee aapppplliiccaattiioonn ooff tthhee pprroocceessss//ddeevviiccee iinn ddiiffffeerreenntt mmaarrkkeettss  DDeetteerrmmiinnee iiff pprroocceessss//ddeevviiccee wwiillll bbee pprrooffiittaabbllee iinn tthhoossee mmaarrkkeettss OOvveerrvviieeww

 Market for Purified Oxygen  Air Separation Methods  Adsorbent Materials  Proposed Use of Technology  Hospital Design  Portable Design  Consumer Utility and Preference  Business Plan  Risk  Recommendations MMaarrkkeett ffoorr 9999%% OOxxyyggeenn

 Oxygen is the third most widely used chemical in the world  Annual worldwide market of over $9 billion. MMaaiinn aapppplliiccaattiioonnss::  Medical oxygen for hospitals and individual use  Industrial applications for refineries and processing plants OOxxyyggeenn iinn MMeeddiicciinnee

 Inhalation therapy

 During surgery to maintain tissue oxygenation under anesthesia

 Resuscitation of patients

 The treatment of such diseases as chronic obstructive pulmonary disease, pneumonia, and pulmonary embolism

 For the newborn experiencing respiratory distress syndrome

 The treatment of respiratory burns or poisoning by carbon monoxide and other chemical substances PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorrss

 Currently no portable device capable of producing 99% oxygen continuously  Portable oxygen cylinders with 99% oxygen lasts up to 8 hours  Percentage of individuals suffering from lung diseases such as chronic obstructive pulmonary disease (COPD) is increasing  COPD is 4th leading cause of death worldwide HHoossppiittaall UUnniitt

 LLaarrggee hhoossppiittaallss ssppeenndd aann eessttiimmaatteedd $$117700,,000000 ppeerr aa yyeeaarr oonn ooxxyyggeenn  AApppprrooxxiimmaatteellyy 335500 llaarrggee hhoossppiittaallss iinn UUnniitteedd SSttaatteess  OOnn--ssiittee uunniitt aalllloowwss ffoorr:: – unlimited supply of Oxygen – Annual savings AAiirr SSeeppaarraattiioonn

 Air is used as feed stock  Oxygen is separated based on physical characteristics  Must remove Nitrogen and Argon for 99% Oxygen purity AAiirr SSeeppaarraattiioonn MMeetthhooddss

 Cryogenic Distillation

 Membrane Separation

 Pressure Swing Adsorption (PSA) CCrryyooggeenniicc SSeeppaarraattiioonn CCrryyooggeenniicc SSeeppaarraattiioonn

 Leading process for producing 99% oxygen in bulk.

 Involves liquidifying air and distilling the liquid air to separate the Oxygen, Nitrogen, and Argon.

 Can be sold in a liquid form. 1 L of liquid Oxygen = 860 L of gaseous Oxygen CCrryyooggeenniicc SSeeppaarraattiioonn

 Drawbacks – Process uses large bulky equipment – Energy requirements are substantial unless demand is more than 60 tons of oxygen per a day – Liquid oxygen evaporates back into the atmosphere over time MMeemmbbrraanneess MMeemmbbrraanneess

 Permeable materials used to selectively separate Oxygen, Nitrogen, and Argon  Large and medium scale production.  Pressurized air is passed through the membrane and is separated by permeability characteristics of each component in relation to the membrane. MMeemmbbrraanneess

Drawbacks

 Membranes require a large surface area to achieve high product flow rates.

 Large pressures are typically used – Safety hazard – Large compressors

 Oxygen and Argon molecules are similar in size and have similar permeability properties. – This results in a selectivity of ≈2.5 O2/Ar and a low oxygen recovery. PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn

 Uses sorbents (zeolites, nanotubes) in two adsorption columns to separate molecules.

 Two columns allow for the process to operate semi- continuously.

 4 Process stages – Adsorption/Production – Blowdown/Purge PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn

Stage 1  Compressed air is fed into the first bed.  Nitrogen and argon molecules are trapped, while oxygen is allowed to flow through. PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn

Stage 2  The adsorbent in the first bed becomes saturated with nitrogen and argon molecules  The airflow feed is directed into the second bed. PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn

Stage 3  The adsorbent adsorbs nitrogen and argon in the second bed.  The first bed is depressurized allowing argon and nitrogen to be purged out of the system and released to the atmosphere. PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn

Stage 4  The process starts over.  Compressed air is once again fed into the first bed.  The second bed is depressurized releasing argon and nitrogen molecules to the atmosphere. AAddssoorrbbeennttss ffoorr PPSSAA

 Introduction to Zeolites and Carbon Nanotubes  Structures  Applications SSiilliiccaa GGeell PPrreettrreeaattmmeenntt

 Pretreatment bed to remove water vapor and impurities such as carbon dioxide – Air at 100% humidity is approximately 3% water vapor

 Water can impair the performance of adsorbents in the PSA adsorption columns.

 Silica gel beds are necessary to remove water vapor from the air. – A heating coil used to evaporate the water from the silica gel KKiinneettiicc SSeeppaarraattiioonn

 MMoolleeccuullaarr SSiieevvee CCaarrbboonn ((MMSSCC)) aaddssoorrbbeennttss uussiinngg PPSSAA tteecchhnnoollooggyy  IIddeeaall ffoorr sseeppaarraattiioonn ooff AArrggoonn aanndd OOxxyyggeenn – MSCs in kinetic adsorption can adsorb Oxygen 30 times faster than Argon  Creates a problem in design, requiring two PSA systems to collect the adsorbed Oxygen CCaarrbboonn NNaannoottuubbeess

 Sheets of carbon atoms rolled into tubes of varying diameters

 Nanotubes have extraordinary strength

 Potential uses in many industrial processes, including adsorption. CCaarrbboonn NNaannoottuubbeess

Advantages  Nanotubes have little interaction with nitrogen at high temperatures due to oxygen’s higher packing efficiency, smaller diameter, and entropic energies

 Research has shown that single walled carbon nanotubes (SWCN) of 12.53Å have a selectivity of O2/N2 of 100:1 at 10 bar.

 It has been indicated that Argon will have very little interaction with nanotubes CCaarrbboonn NNaannoottuubbeess

Disadvantages  Nanotubes are so efficient the volume of nanotubes required for separation of air is much smaller than the volume of feed air. – Nanotubes’ surface area is not large enough to react with the volume of air required. – No current way to disperse nanotubes effectively for PSA air separation

 Price range for nanotubes is $325 to $500 per gram ZZeeoolliitteess

 Microporous crystalline structures

 Lifespan of 10 years

 The zeolite’s structure governs which molecules are adsorbed.

 Various ways of controlling adsorption – separate molecules based on differences of size, shape and polarity ZZeeoolliitteess

IIoonn EExxcchhaannggee::  Metal cations (calcium, sodium, silver) are bound to the zeolite structure – Silver cation zeolites have be proven to be best for air separation

 Creates an electrostatic interaction between the cation ion and the molecules being adsorbed LLiiAAggXX ZZeeoolliittee

 Useful for removing Nitrogen from Oxygen with product throughput .1 kg 02/hr/kg adsorbent.

 Can obtain 96.42% oxygen purity with 62.74% Oxygen recovery.

 Drawback is the selectivity of Argon to Oxygen is approximately 1:1. AAggAA ZZeeoolliittee

 Argon to Oxygen selectivity of 1.63 to 1

 7 cm3/g of Argon adsorbed at atmospheric pressure

 Nitrogen to Oxygen selectivity of 5 to 1 0 1 1 FN 2 t  L1 AN N 2  1 AN N 2

EEqquuiilliibbrriiuumm AAddssoorrppttiioonn TThheeoorryy

 Competition between the different molecules on the adsorbent sites exists. – Langmuirian Multi-component Theory is used to determine the fractional loading of each component on the adsorbent

 Selectivity describes how selective one component is to bind to the adsorbent over another component 0 1 1 FN 2 t  L1 AN N 2  1 AN N 2

EEqquuiilliibbrriiuumm AAddssoorrppttiioonn TThheeoorryy

 Material Balances – Nitrogen  – Oxygen  – Argon   0 1 1 FN 2 t  L1 AN N 2  1 AN N 2

EEqquuiilliibbrriiuumm AAddssoorrppttiioonn TThheeoorryy

For the adsorption bed to remove both Nitrogen and Argon the velocity ratio of the argon front must be greater than that of the nitrogen front PPrrooppoosseedd UUssee ooff tthhee PPrreesseenntteedd TTeecchhnnoollooggiieess PPrrooppoosseedd UUssee ooff TTeecchhnnoollooggyy

 Pressure Swing Adsorption (PSA) will be used in the design for: – Medium scale capacity – Safety – Cost savings

 An analysis of 4 designs using zeolites LiAgX and AgA in the PSA adsorption beds was performed. The column diameter and cycle time was held constant. – Design 1  LiAgX zeolite – Design 2:  AgA zeolite – Design 3:  Mixed ratio of zeolites LiAgX and AgA – Design 4:  Both LiAgX and AgA zeolites separating them DDeessiiggnn 11:: LLiiAAggXX zzeeoolliittee

 Nitrogen Removal – LiAgX removes nitrogen with a 96.42% purity Oxygen and 62.74% recovery. – The is the best zeolite for nitrogen removal  Argon Removal – Argon to Oxygen selectivity of 1:1. – Requires a large volume of LiAgX zeolite to accomplish required purity  Large volume of zeolite is required. Costs and inlet airflow rate increases. DDeessiiggnn 22:: AAggAA zzeeoolliittee

 Nitrogen Removal – Nitrogen to Oxygen selectivity of 5 to 1 in AgA zeolite – Selectivity is lower than if using LiAgX zeolite  Argon Removal – Argon to Oxygen selectivity of 1.63 to 1 – Best design for Argon removal  Large volume of zeolite is required – Costs and inlet airflow rate increases. DDeessiiggnn 33:: MMiixxeedd zzeeoolliitteess

 Nitrogen Removal – LiAgX has a higher loading and selectivity of nitrogen than AgA. – Not beneficial to mix them in order to rid of the nitrogen.  Argon Removal – AgA has a higher loading and selectivity toward argon, selectivity being 1.63 than LiAgX which has a 1:1 ratio – Mixing in LiAgX in the argon removal section would only hurt performance as well. DDeessiiggnn 44:: LLiiAAggXX aanndd AAggAA zzeeoolliitteess sseeppaarraatteedd

 Nitrogen – LiAgX zeolite with a 96.42% Oxygen purity and 62.74% recovery  Argon – AgA zeolite with an Argon to Oxygen selectivity of 1.63 to 1  The volume is dramatically lower – Save money on the zeolite cost and overall unit  The inlet air flow rate would be less due to the higher recovery of oxygen  Has been determined most beneficial design ZZeeoolliittee DDeessiiggnn AAnnaallyyssiiss

HHoossppiittaall AAiirr SSeeppaarraattiioonn DDeessiiggnn wwiitthh PPrreessssuurree SSwwiinngg AAddssoorrppttiioonn PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

Large hospital information

 Approximately 350 large hospitals in the United States (500-1000 beds).

 At any time have 150 users using 5L/min. PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

 GGooaallss – Use PSA technology to produce 99% oxygen with all specifications.

– Provide for maximum capacity of 300 users at 5 L/min of oxygen to adjust for fluctuation in demands.

– Determine if product is profitable and a plausible option for large hospitals. PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

First calculate inlet air flow rate of air: Calculation of Inlet Flow Rate Recovery of Oxygen (LiAgX) (%) 62.7 Recovery of Oxygen (AgA) (%) 55.0 Total Recovery of Oxygen (%) 34.5 Assume 30 second Cycle Time Oulet Oxygen needed for 300 users at 5L/min 1500 Oxygen Adsorbed per 2 columns (L) 2850 Inlet Oxygen (L/min) 4350 Inlet Air Mixture (L/min) 21750 PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

Adsorbent Results Inlet Air Mixture (L) 21750.0 Inlet Air Feed to each column (L) 10875.0 Flow rate air to each column (L/s) 362.5 LiAgX Section of Column Product Throughput kg O2/h/kg adsorbent 0.1 Total 96.42% Pure Oxygen from LiAgX 2729.2 Mass of LiAgX Zeolites (kg) 3303.0 AgA Section of Column Total Entering O2/Ar mixture (L) 1447.8 Product Throughput kg O2/h/kg adsorbent 0.2 Mass of AgA Zeolites (kg) 1229.5 PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

Column Specifications Total Mass of Zeolites per Column (kg) 4532 Total Volume of Zeolites per Column (L) 4236 Column Data Volume of Column (L) 4236 Diameter of Column (cm) 80 Height of Column (cm) 421 Total Loading of N2/O2/Ar per Column (kg) 22 PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

Final Components of Design Compressor (Palatek) Max Flow of Compressor (CFM) 900 Inlet Flow to be Compressed (CFM) 776 Power Consumption (hP) 200 Silica Gel Drying Column Volume (cm^3) 20291 Height (cm) 65 Diameter (cm) 20 Mass of Silica Gel (kg) 12 PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall

Components Continued High Pressure Storage Tank Volume to be stored in 60 minutes (L) 92100 Volume of stored air at 10 atm 9210 Compressor for High Pressure Storage (Palatek) Inlet Flow to be Compressed (CFM) 55 Max Flow of Compressor (CFM) 100 Power Consumption (hP) 50 PPrrooppoosseedd DDeessiiggnn -- HHoossppiittaall Important Results Purity of Air (LiAgX) 96.42 Volume of O2/Ar out of LiAgX Section 1448 Purity of Air (AgA) >99 Vol. 99% Oxygen out of 1 Column/30 sec 750 Volume 99% O2 out in 1 min 1501 Users Supplied at 5L/min 300 Goals met: Producing 99% Oxygen Supply 300 users of oxygen at 5L/min! PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorr DDeessiiggnn PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorrss

MMaarrkkeett DDeessiiggnnss:: – Only alternative to carrying bottles of oxygen. – Uses PSA to purify air stream. – Small enough to carry. Less than 30 lbs. – Uses battery power to increase portability. – 85%-95% oxygen purity. PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorrss

Necessary Requirements 1. Weighs less than 30 lbs. 2. 99% oxygen purity at 5 liters per minute. 3. Battery life of at least 8 hours. 4. Small enough to take on airplane 5. Low noise 6. Less than $5,000/unit and covered by medicare. Oxygen Concentrator Weight Parts # kg Price Cost Column and Tanks Adsorption Columns (Al) 1.5 liter 2 1.86 $100.00 $200.00 Drying Column (Al) 1 liter 1 0.0115 $100.00 $100.00 Low Pressure Storage tank (Al) 2 liter 1 1.86 $100.00 $50.00 Packing LiAgX Zeolites (Adsorbent) 5 $.4/g $2,000.00 Silver Zeolite A (Adsorbent) 1.4 $.4/g $560.00 Silica Gel (Drying) 0.08 $.05/g $4.00 Other items Inlet Feed Compressor 1 2.73 $100.00 $100.00 Nitrogen Exhaust Muffler 1 0.23 $3.00 $3.00 3 Way Ball Valve 2 0.09 $100.00 $200.00 2 Way Solenoid Valve 2 0.09 $100.00 $200.00 Battery 3 0.93 $100.00 $300.00 Control Computer 1 0.09 $300.00 $300.00 Frame (Aluminum) 1 0.91 $100.00 $100.00 Casing (Plastic) 1 0.09 $75.00 $75.00

Final Total Weight (kg) 9.35 Total Cost = $4,192.00 Final Total Weight (lb) 20.57 PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorrss

GGooaallss mmeett wwiitthh ppoorrttaabbllee ooxxyyggeenn ccoonncceennttrraattoorr ffrroomm iinniittiiaall eessttiimmaatteess::

PPuurriittyy:: 9999%% OOxxyyggeenn CCoosstt:: $$44220000 uunnddeerr $$55000000 WWeeiigghhtt:: 2200..55 llbb uunnddeerr 3300llbb SSmmaallll:: EEssttiimmaatteedd VVoolluummee ..66fftt xx 11fftt xx 11fftt PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorrss PPoorrttaabbllee OOxxyyggeenn CCoonncceennttrraattoorrss

CCoonncclluussiioonnss//RReeccoommmmeennddaattiioonnss:: AA ccoommppeettiittiivvee//lliigghhttwweeiigghhtt ppoorrttaabbllee ooxxyyggeenn ccoonncceennttrraattoorr wwiitthh 9999%% ooxxyyggeenn ccaann bbee pprroodduucceedd..

PPeerrffoorrmm eexxtteennssiivvee ddeessiiggnn eessttiimmaatteess aanndd eeccoonnoommiicc aannaallyyssiiss.. CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

 Method used to determine relationship between: – consumer preference – satisfaction in order to predict product price and product demand. CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

Theory The solution to consumer utility maximization is given by:

 1   Y  p1d1   (d1)  p1d1    p2   d1  0     p2 

α = Inferiority Function (Knowledge of product, function of time) Β = Superiority Function (Consumer preference, comparison to competition “preference”) Y= Consumer budget= p1*d1+p2*d2 CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

H2  Further Quantification of β   (ratio of consumer H1 preference)

Preference values must be between 0 and 1. A value of 1 indicates maximum preference toward a product.

If the competitor preference H2= .69 and H1=1 (max) then the overall β = .69/1 = .69 CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

H   2 H 1 H  w y  Consumer Preference i  i i wi= weight based on consumer preference characteristics, smaller than 1 yi= consumer utilities based on evaluation, can be changed to meet specific preference values. Range between 0 and 1. 1 is 100% satisfaction in the product CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

 Determining weights

1. Identify Important Characteristics for general oxygen supply for a hospital

2. Determine consumer importance placed on characteristics through surveys

3. Characteristic relation to product properties

4. Determine weights to each characteristic from importance surveys CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

 Important consumer characteristics for hospital design and weights assigned to them.

Characteristics Weights (wi) Noise 0.175 Ease of Use 0.147 Appearance 0.112 Frequency of Maintenance 0.184 Reliability 0.205 Durability 0.177 CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee Determining yi (%preferences) H  w y of consumer values i  i i

1. Develop expression between %preference and words used to describe each characteristic by consumer description.

2. Relates the characteristic descriptions to physical attributes.

3. Combine the first two expressions to yield a % preference of characteristic versus physical attributes. % Preference for Appearance Characteristic 1

0.9

0.8

) 0.7 e c n 0.6 e r e f 0.5 e r P 0.4 % ( y 0.3

0.2

0.1

0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Ugly Poor Good Beautiful Stunning

Appearance Appearance Characteristic

5

Stunning

4.5

4

Beautiful

3.5 e

3 c n a r

Good 2.5 a e p p 2 A Poor

1.5

1

Ugly

0.5

0

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Does not blend with Somewhat blends with hospital, Some Blends with hospital, hospital, Limited color, architecture, and texture options many architectual, color, color and texture Color and Texture Options and texture options options Appearance Characteristic

1

0.9

0.8

) 0.7 e c n 0.6 e r e f 0.5 e r p 0.4 % ( y 0.3

0.2

0.1

0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Does not blend with Somewhat blends with hospital, Some Blends with hospital, hospital, Limited color, architecture, and texture options many architectual, color, color and texture and texture options options Color and Texture Options CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

AAppppeeaarraannccee  Utility function (yi) generated

Y(%preference)=-0.0134x3 + 0.1248x2 - 0.0888x + 0.0063 where x=Color/Texture

The appearance of the oxygen concentrator depends on the outer casing. CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

AAppppeeaarraannccee  To draw in the most consumers, 3 types of siding materials were looked at: Veneer, Aluminum, and Vinyl.

Material Quoted Price Total Cost Vinyl Siding $1.6/ sq ft [30] $1,760 Aluminum Siding $1.7/ sq ft [30] $1,870 Veneer Stone Siding $3.5/ sq ft [31] $3,850 % Preference for Noise Characteristic 1

0.9

0.8

) 0.7 e c n 0.6 e r e

f Tolerant People

e 0.5 r P 0.4 % ( Non Tolerant People y 0.3

0.2

0.1

0 0 20 40 60 80 100 120 Threshold of Not Noisy Noisy Very Noisy Threhold of Hearing Pain Noise (dB) 120 Noise Characteristic Threhold of Pain

100

Very Noisy

80 ) B d ( Noisy e 60 s i o N

Not Noisy 40

20 Threshold of Hearing

0 0 1 2 3 4 5 6 Rustling leaves, Quiet office or Conversation Passing Car 10 Night club no noise home ft/disposal 3ft w/ band Common Noises Noise Characteristic 1

0.9

0.8

) 0.7 e c n

e 0.6 r Non Tolerant People e f e 0.5 Tolerant People r p

0.4 % ( y 0.3

0.2

0.1

0 0 20 40 60 80 100 120 Rustling leaves, Quiet office or Conversation Passing Car 10 Night club w/ no noise home ft/disposal 3ft band Common Noises CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

Noise

 Utility function (yi) generated

Y(%preference)=-4E-06x3 - 0.0007x2 + 0.0278x + 0.724 where x(common noise) CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

NNooiissee  To draw in the most consumers, a layer of noise soundproofing foam will be added to the casing of the concentrator. Material Reduction % Total Cost ($) Ultra Barrier 95 10141 Quiet Barrier 90 4412 Econo Barrier 80 2119 Sound Proof Foam 65 2406 CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

EEaassee ooff UUssee ((aammoouunntt ooff ttrraaiinniinngg)) – Utility Function Y(%preference)= 0.0366x2 + 0.0227x - 0.0089 where x=(Training Needed)

If no training is needed than the hospital design is easy for anyone to use. % Preference for Ease of Use Characteristic 1 0.9 0.8 ) e 0.7 c n e 0.6 r e f 0.5 e r P

0.4 % (

0.3 y 0.2 0.1

0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Extensive Training Needed No Training Training Needed Needed for Operation Amount of Training CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

RReelliiaabbiilliittyy ((MMTTBBFF))  Utility function (yi) generated

Y(%preference)=0.0037x3 - 0.0796x2 + 0.5394x - 0.159 where x(MTBF) % Preference for Reliability Characteristic 1

0.9

0.8

) 0.7 e c n

e 0.6 r e f 0.5 e r p 0.4 % (

y 0.3

0.2

0.1

0 0 1 2 3 4 5 6 7 8 9 10 MTBF (years) CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

MMaanniippuullaattiioonn:: Increase consumer preference by including parts with large MTBF values.

Adding a backup unit to the primary unit will increase reliability. If one unit breaks down, the other unit will turn on. CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

DDuurraabbiilliittyy ((ttiimmee ttoo rreevvaammpp))  Utility function (yi) generated

Y(%preference)=0.014x3 - 0.0475x2 + 0.0881x - 0.0037 where x(Time to Revamp)

 Manipulation: Increase consumer preference by including valves and compressors with long term resistance to wear. % Preference for the Durability Characteristic 1

0.9

0.8

0.7 ) e c

n 0.6 e r e f 0.5 e r p

% 0.4 ( y 0.3

0.2

0.1

0 0 1 2 3 4 5 Time to Revamp (years) CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

Maintenance(visits per year) Utility function (yi) generated

Y(%preference)=-0.0083x3 - 0.0607x2 - 0.1012x + 1.0036 where x(Maintenance visits/year)

Manipulation: Greater MTBF leads to less maintenance. % Preference for Frequency of Maintenance Characteristic 1 0.9

) 0.8 e c 0.7 n e r 0.6 e f Tolerant People e 0.5 r Non Tolerant People P

0.4 %

( 0.3 y 0.2 0.1 0 0 1 2 3 4 5 6 Maintenance Visits per Year CCoonnssuummeerr UUttiilliittyy aanndd PPrreeffeerreennccee

All utility functions are used to find % preference to be multiplied by characteristic weights to achieve the preference value.

Y(Appearance)=-0.0134x3 + 0.1248x2 - 0.0888x + 0.0063 Y(Noise)=-4E-06x3 - 0.0007x2 + 0.0278x + 0.724 Y(Ease of Use)= 0.0366x2 + 0.0227x - 0.0089 Y(Reliability)=0.0037x3 - 0.0796x2 + 0.5394x - 0.159 Y(Durability)=0.014x3 - 0.0475x2 + 0.0881x - 0.0037 Y(maintenance)=-0.0083x3 - 0.0607x2 - 0.1012x + 1.0036

Hi   wi yi BBuussiinneessss MMooddeell

Competitor (liquid oxygen) % Preference (yi) Preference/Characteristic (Hi) Noise 0.930 0.163 Ease of Use 0.950 0.140 Appearance 0.580 0.065 Frequency of Maintenance 0.360 0.066 Reliability 0.900 0.185 Durability 0.760 0.135 0.753

Now found competitor H2 value can vary oxygen product to produce several new Example Designs preference values H1 for different β values. Beta Values Design1 0.85 Design2 0.92 1  Design3 0.95  Yp1d1  Design4 0.97 (d1) p1d1   p2  d1 0 Design5 1.05   p2  Design6 1.12 BBuussiinneessss MMooddeell ffoorr HHoossppiittaall DDeessiiggnn BBuussiinneessss MMooddeell

GGooaallss  DDeetteerrmmiinnee ββ vvaalluuee tthhaatt wwiillll mmaaxxiimmiizzee NNPPVV aatt tthhee bbeesstt pprriiccee ffoorr ddeessiiggnn..

 DDeetteerrmmiinnee tthhee eeffffeecctt ooff vvaarryyiinngg αα((kknnoowwlleeddggee)) wwiitthh ttiimmee wwiitthh aa sseett ββ vvaalluuee.. BBuussiinneessss MMooddeell

Determining P1 and D1: Example of prices and demands from consumer utility maximization with Beta=.85  1      Y  p 1 d 1   p 1 d 1    p 2   d 1  0     p 2 

Price Demand 150000 291 175000 202 200000 140 225000 98 250000 69 275000 50 300000 36 325000 27 350000 20 BBuussiinneessss MMooddeell

Items now needed to find NPV  Total Product Costs – Raw Materials – Variable Production Costs – Administrative Costs – Advertising Costs – Distribution Costs – Fixed Charges  TCI  Total Equipment Costs BBuussiinneessss MMooddeell

TToottaall PPrroodduucctt CCoossttss ppeerr yyeeaarr Raw materials (depend on demand)

Raw Materials Cost Basis for Estimate Rate or Quantity $ Silica Gel $.22/100g quote 20 units sold in first year 920 g $20 LiAgX Zeolite $.4/100g quote 20 units sold in first year 4130 kg $165,200 Silver Zeolite A $.4/100g quote 20 units sold in first year 1230 kg $49,200 Quiet Barrier Noise Proof Foam Quote: $361/sheet 16 sheets to cover casing of unit $115,520 Vinyl Sidiing Quote: $1.6/sq ft 1400 sq ft to cover $44,800 Total Raw Materials Cost $214,420 BBuussiinneessss MMooddeell

TToottaall PPrroodduucctt CCoossttss  Variable Production Costs (utilities, supplies, maintenance)

Variable Production Costs Utilities Basis for Estimate Rate or Quantity Electricity 150 bulbs, 23W, full year operation $.13/kWh $3,884 Office heating/cooling/electronics 900W/hr $1,157 Water Assume 100 gal/day $1.98/1000 gal (Georgia cost) $723

Operating Supplies (variable costs) Pencils 12 BIC Mechanical Pencils $5.50 Use 288 per year $132 Staples Swingline $1.50 per box Use 3 boxes per year $5 Ink for Printer $60 per black/color ink combo package Use 6 per year $360 Pens 12 Bic Pens $5.50 Use 96 per year $44 Paper $33 per case of multipurpose paper Use 2 per year $66

Maintenance and repairs on building Estimate of .05 of FCI $1,150 Total variable production costs $7,520 BBuussiinneessss MMooddeell

TToottaall PPrroodduucctt CCoossttss  Administrative Costs

Administrative Costs Employees # employees Engineers 1 Assume $60,000 salary/year $60,000 Accountant 1 Assume $30000 salary/year $30,000 Skilled Labor 2 Assume $30000 salary/year $60,000 Traveling Salesman 1 Assume $35000 salary/year $35,000 Secretary 1 Assume $25000 salary/year $25,000 Traveling Maintenance 1 Assume $35000 salary/year $35,000 Total Administrative Costs $245,000 BBuussiinneessss MMooddeell

Distribution and marketing expenses Distribution and marketing expenses Basis for Estimate Rate or Quantity Sales personnel expenses Assume visits 70% large hospitals = 175, only 3 day/ trip estimate, 35 trips/year Airfare $400/trip $14,000 Hotel $100/trip per day $10,500 Food $50/trip per day $5,250 Rental Car / Gas $80 per day for rent and gas $8,400 Total Sales Expenses per Year $38,150

Advertising Assume high advertising from calculations Estimated $100,000 Brochures $1/brochure, send 50 to each hospital/year $12,500 DVD $8/DVD, send 10 to each hospital/year $20,000 Mailing expenses Assume 10lb per box at $20/box $10,000 Total Adversing Expenses (high advertisement rate) $42,500

Shipping 20 units shipped in first year from demand estimate $.3/kg, unit weight ˜ 16000kg $192,000 Total Distribution and marketing expenses $272,650 T o ta l P ro d u c t C o s t fo r F irs t-Y e a r P ro d u c t: P re s s u re S w in g A d s o rp tio n fo r L a rg e H o s p ita ls

O p e ra tin g tim e d a y /ye a r 2 5 0 F C I($ ) 1 3 7 0 6 E stim a te d u n its fa b rica te d /ye a r 2 0

B a s is fo r E s tim a te R a te o r Q u a n tity $ S ilic a G e l $ .2 2 /1 0 0 g q u o te 2 0 u n its so ld in first y e a r 1 8 4 0 g $ 8 1 L iA g X Z e o lite $ .4 /1 0 0 g q u o te 2 0 u n its so ld in first y e a r 8 2 6 0 k g $ 6 6 0 ,8 0 0 S ilv e r Z e o lite A $ .4 /1 0 0 g q u o te 2 0 u n its so ld in first y e a r 2 4 6 0 k g $ 1 9 6 ,8 0 0 Q u ie t B a rrie r N o is e P ro o f F o a m Q u o te : $ 3 6 1 /sh e e t 1 6 sh e e ts to c o v e r c a sin g o f u n it $ 1 1 5 ,5 2 0 V in y l S id iin g Q u o te : $ 1 .6 /sq ft 1 4 0 0 sq ft to co v e r $ 4 4 ,8 0 0 T o ta l R a w M a te ria ls C o s t $ 1 ,0 1 8 ,0 0 1

V a ria b le P ro d u c tio n C o s ts U tilitie s E le c tric ity 1 5 0 b u lb s, 2 3 W , fu ll y e a r o p e ra tio n $ .1 3 /kW h $ 3 ,8 8 4 O ffice h e a tin g /co o lin g /e le ctro n ics 9 0 0 W /h r $ 1 ,1 5 7 W a te r A ssu m e 1 0 0 g a l/d a y $ 1 .9 8 /1 0 0 0 g a l (G e o rg ia c o st) $ 7 2 3

O p e ra tin g S u p p lie s (v a ria b le c o s ts ) P e n cils 1 2 B IC M e ch a n ic a l P e n c ils $ 5 .5 0 U se 2 8 8 p e r y e a r $ 1 3 2 S ta p le s S w in g lin e $ 1 .5 0 p e r b o x U se 3 b o x e s p e r ye a r $ 5 In k fo r P rin te r $ 6 0 p e r b la c k/c o lo r in k co m b o p a c ka g e U se 6 p e r y e a r $ 3 6 0 P e n s 1 2 B ic P e n s $ 5 .5 0 U se 9 6 p e r y e a r $ 4 4 P a p e r $ 3 3 p e r ca se o f m u ltip u rp o se p a p e r U se 2 p e r y e a r $ 6 6

M a in te n a n c e $ 5 0 0 0 p e r m a in te n a n c e v isit E stim a te 1 /1 0 b re a k d o w n in y e a r 1 $ 1 0 ,0 0 0 T o ta l v a ria b le p ro d u c tio n c o s ts $ 1 0 ,6 0 7

F ix e d C h a rg e s W a re h o u s e $ 6 .9 /s q ft/y e a r q u o te 3 2 0 0 s q ft, A tla n ta , G e o rg ia (2 0 % o ffic e ) $ 2 2 ,0 8 0 T o ta l F ix e d C h a rg e s $ 2 2 ,0 8 0

A d m in is tra tiv e C o s ts E m p lo y e e s # e m p lo y e e s E n g in e e rs 1 A ssu m e $ 6 0 ,0 0 0 sa la ry /y e a r $ 6 0 ,0 0 0 A c c o u n ta n t 1 A ssu m e $ 3 0 0 0 0 sa la ry /ye a r $ 3 0 ,0 0 0 S k ille d L a b o r 2 A ssu m e $ 3 0 0 0 0 sa la ry /ye a r $ 6 0 ,0 0 0 T ra v e lin g S a le s m a n 1 A ssu m e $ 3 5 0 0 0 sa la ry /ye a r $ 3 5 ,0 0 0 S e c re ta ry 1 A ssu m e $ 2 5 0 0 0 sa la ry /ye a r $ 2 5 ,0 0 0 T ra v e lin g M a in te n a n c e 1 A ssu m e $ 3 5 0 0 0 sa la ry /ye a r $ 3 5 ,0 0 0 T o ta l A d m in is tra tiv e C o s ts $ 2 4 5 ,0 0 0

D is trib u tio n a n d m a rk e tin g e x p e n s e s S a le s p e rs o n n e l e x p e n s e s A ssu m e v isits 7 0 % la rg e h o sp ita ls = 1 7 5 , o n ly 3 d a y/ trip e stim a te , 3 5 trip s/y e a r A irfa re $ 4 0 0 /trip $ 1 4 ,0 0 0 H o te l $ 1 0 0 /trip p e r d a y $ 1 0 ,5 0 0 F o o d $ 5 0 /trip p e r d a y $ 5 ,2 5 0 R e n ta l C a r / G a s $ 8 0 p e r d a y fo r re n t a n d g a s $ 8 ,4 0 0 T o ta l S a le s E x p e n se s p e r Y e a r $ 3 8 ,1 5 0

A d v e rtis in g A ssu m e h ig h a d v e rtisin g fro m ca lcu la tio n s E stim a te d $ 1 0 0 ,0 0 0 B ro c h u re s $ 1 /b ro c h u re , se n d 5 0 to e a ch h o sp ita l/y e a r $ 1 2 ,5 0 0 D V D $ 8 /D V D , se n d 1 0 to e a c h h o sp ita l/ye a r $ 2 0 ,0 0 0 M a ilin g e x p e n se s A ssu m e 1 0 lb p e r b o x a t $ 2 0 /b o x $ 1 0 ,0 0 0 T o ta l A d v e rs in g E x p e n s e s (h ig h a d v e rtis e m e n t ra te ) $ 4 2 ,5 0 0

S h ip p in g 2 0 u n its sh ip p e d in first ye a r fro m d e m a n d e stim a te $ .3 /k g , u n it w e ig h t ˜ 1 6 0 0 0 kg $ 1 9 2 ,0 0 0

T o ta l D is trib u tio n a n d m a rk e tin g e x p e n s e s $ 2 7 2 ,6 5 0 T o ta l P ro d u c t C o s t $ 1 ,5 6 8 ,3 3 7 BBuussiinneessss MMooddeell

 Now find TCI Capital Investment for Hospital Design Assumptions Costs Office Furniture and Related Equipment Quantity Desks $250/desk (office depot) 4 $1,000 Chairs $115/chair (office depot) 6 $2,760 Phones $60/phone (multi line) (office depot) 6 $360 Computers $800/computer (Dell Precision) 4 $3,200 Office Supplies (stapler, rulers, paper) $300 for all supplies N/A $150 Printer/Copier/Fax Machine $300 (Intellifax-400e) (office depot) 1 $300 House keeping supplies (Vaccum, Mop) $200 (Dirt Devil - Bagless Upright) 1 $300 Tools including nuts and bolts $3000/tool set (home depot) 3 $9,000 Bobcat Forklift $3000 used price 1 $3,000

Total estimated fixed capital investment $20,070

Working Capital 15% of TCI $3,542 Total Capital Investment $23,612 BBuussiinneessss MMooddeell

 LLaassttllyy,, EEqquuiippmmeenntt CCoossttss

Estimation of Equipment Cost of 1 Unit Basis for Estimate Quantity Equipment Costs Nitrogen Removal Column Quote 4 $32,000 Drying Column Quote 1 $200 Palatek Compressor 200UD Quote: $9800 2 $19,600 Palatek Compresser H30D7 Quote: $5000/unit 2 $10,000 High Pressure Storage Tank Fig.12.53 in P&T 1 $12,000 3 Way Control Valve Quote: $700/unit 8 $5,600 Control Computer Quote 1 $600

Total Equipment Costs $80,000 NPV v Price

B=.85 $2,500,000 B=.92 B=.91

) B=.97 V $1,500,000 P B=1.05 N (

B=1.12 e u l a $500,000 V t n e s $125,000 $175,000 $225,000 $275,000 $325,000 e

r ($500,000) P t e N ($1,500,000)

($2,500,000) Price of Unit ($) ROI v Price 6000%

5000% B=.88 B=.92 4000% B=.95 ) I

O 3000% B=.97 R (

B=1.05 t n e 2000% B=1.12 m t s e 1000% v n I n

o 0% n r $125,000 $175,000 $225,000 $275,000 $325,000 u t -1000% e R

-2000%

-3000%

-4000% Price of Unit ($) BBuussiinneessss MMooddeell

RReessuullttss::

 NNPPVV oovveerr 55 yyeeaarr ssppaann== $$22,,880000,,000000  OOppttiimmaall ββ==..8855  PPrriiccee ooff uunniitt $$225500,,000000  RROOII ffoorr 11st yyeeaarr == 55220000%% BBuussiinneessss MMooddeell

VVaarryyiinngg αα ((ccoonnssuummeerr kknnoowwlleeddggee)) wwiitthh TTiimmee BBuussiinneessss MMooddeell

GGooaallss  NNooww ffiinndd kknnoowwlleeddggee//aaddvveerrttiissiinngg aass aa ffuunnccttiioonn ooff ttiimmee

 AAssssuummee ffuullll ccoonnssuummeerr kknnoowwlleeddggee wwiitthhiinn 22 yyeeaarrss ooff hhiigghh aaddvveerrttiissiinngg.. 1

0.8

a 0.6 h

p high alpha l a med alpha 0.4 low alpha

0.2

0 0 1 2 3 4 5 6 7 8 9 10 Time (Years) BBuussiinneessss MMooddeell

Work Completed:  Vary alpha with time with optimal beta and price.

 Graphs to Plotted: – Revenue versus Time – Demand versus Time – NPV versus Time – ROI versus Time Demand v Time (varying alpha) 30

25 ) s 20 t i n u (

d 15 n a m e 10 D

5

0 0 1 2 3 4 5 6 7 8 9 10 Time (years) Revenue v Time (Varying alpha) $7,000,000

$6,000,000

$5,000,000 ) $ ( $4,000,000 e u n e v $3,000,000 e R $2,000,000

$1,000,000

$0 0 1 2 3 4 5 6 7 8 9 10 Time (years) NPV v Time (varying alpha)

$6,000,000

$5,000,000 e u l $4,000,000 a V t n e $3,000,000 s e r P t $2,000,000 e N

$1,000,000

$0 0 1 2 3 4 5 6 7 8 9 10 Time (years) ROI v Time (Varying Alpha)

25000%

% 20000% t n e m t

s 15000% e v n I n

o 10000% n r u t e

R 5000%

0% 0 1 2 3 4 5 6 7 8 9 10 Time (years) PPrreelliimmiinnaarryy RRiisskk EEssttiimmaatteess ooff OOxxyyggeenn CCoonncceennttrraattoorr RRiisskk

 Goal of this section is to predict profit if the scenario occurs that less consumers purchase the product.

 Consumer utility maximization could have predicted wrong.

 Copycats may enter market or oxygen prices may drop limiting market. Demand v Time (Varying Demand %) 30 100% of Expected Demand

25 50% of Expected Demand

25% of Expected Demand

) 20 s t i n u (

d 15 n a m e

D 10

5

0 0 1 2 3 4 5 6 7 8 9 10 Time (years) Revenue v Time (Varying Demand)

$7,000,000 100% of Expected Demand 50% of Expected $6,000,000 Demand 25% of Expected Demand $5,000,000 ) $ ( $4,000,000 e u n e v $3,000,000 e R

$2,000,000

$1,000,000

$0 0 1 2 3 4 5 6 7 8 9 10 Time (years) NPV v Time (Varying Demand)

$7,000,000 100% of Expected $6,000,000 Demand 50% of Expected $5,000,000 Demand 25% of Expected

) Demand

$ $4,000,000 (

V P $3,000,000 N

$2,000,000

$1,000,000

$0 0 1 2 3 4 5 6 7 8 9 10 Time (Years) ROI v Time (Varying Demand) 30000%

100% of Expected Demand 25000% 50% of Expected Demand

20000% 25% of Expected Demand %

I 15000% O R

10000%

5000%

0% 0 1 2 3 4 5 6 7 8 9 10 Time (years) CCoonncclluussiioonnss

 TThhee hhoossppiittaall pprroojjeecctt hhaass bbeeeenn sshhoowwnn ttoo bbee pprrooffiittaabbllee eevveenn iiff ddeemmaanndd iiss lleessss tthhaann 7755%% tthhaann eexxppeecctteedd..

 NNPPVV oovveerr 55 yyeeaarr ssppaann== $$22,,880000,,000000  RROOII oovveerr 11 yyeeaarr ssppaann == 55220000%% FFuuttuurree WWoorrkk

 Research more into practical application of portable oxygen concentrators.

 Further studies on maximization of NPV, ROI, and hospital preferences.

 More in-depth analysis of risk and consumer/competitor reaction estimation. BBuussiinneessss MMooddeell

Preliminary Financial Analysis Concentrator Liquid Oxygen Total Cost per 5 Year $500,000 $850,000 Total Savings for 5 Years $350,000 Average Savings per Year $70,000 FFiinnaall CCoonncclluussiioonnss

 It is now possible to deliver 99% oxygen to patients in a hospital, and to those who want to enjoy a life without the restriction of bulky liquid oxygen bottles. FFiinnaall CCoonncclluussiioonnss

 This technology would change the lives of millions of patients and those needing oxygen around the world for years to come. QQuueessttiioonnss??